Batteries Keep On Getting Cheaper

Here’s another good news item that will certainly bother electric vehicle (EV) critics. Something readers on CleanTechnica know is that EV battery prices are continuing to get cheaper. This not only spells good news for the industry but challenges other alternative energy drivetrains.

It might sound obvious to say batteries are getting cheaper, but we’re always amazed to see how many people aren’t aware of it. But battery price have indeed steadily come down for the past 20 years, especially for lithium-ion batteries.

The average price of a lithium-ion battery pack is down to $209/kilowatt-hour and the prices are set to fall below $100/kWh by 2025, according to a Bloomberg New Energy Finance (BNEF) survey.

In a story covered here in 2016, Zachary highlighted how much the price of batteries has come down over the past decade. A year and a half ago, we wrote that the upfront price of EVs and plug-in hybrids (PHEV) was higher than that of similarly sized gasoline-powered cars. This is due to expensive batteries. Although, it’s close to impossible to estimate the price of batteries for carmakers since they don’t generally tell us — what they expect to pay in 1 year, 2 years, 3 years, etc. is what interests us.

Tesla’s battery price hovered around $400/kWh a few years ago, got down below $190/kWh in early 2016 if not earlier, and may be around $150/kWh today. Elon Musk said that the cost of EV batteries would drop below $200 per kWh in the “not-too-distant future” in 2012. Today, GM’s LG Chem battery cells are estimated at $145/kWh. This means a pack may cost around $190/kWh.

According to BNEF analyst James Frith, the average battery pack price is set to fall below $100/kWh by 2025 — hopefully sooner. According to Frith, $100/kWh is widely seen as “a tipping point in the adoption of EVs.”

The price estimated by BNEF comes from a survey of more than 50 companies. The price decline is due to a growing battery manufacturing industry with significant economies of scale starting to really bring the costs down.

Remove from this developers of stationary storage systems, rooftop solar panels, EV chargers and networks, and we would individually pay at least 51% more. With carmakers buying batteries and renewable energy companies adding stationary storage, the prices drop to lower and lower levels much more quickly.

Putting The Battery Price Drop Into Perspective

I remember schlepping around a huge and heavy battery pack on one shoulder, a Betamax recording on the other, and a video camera on top of it in the early 1980s. Today, I get HD-like quality on a smartphone that fits in the palm of my hand. As we went from heavy lead-acid to gel packs, to the revolutionary nickel-metal-hydride (NiMH) and finally the ever-lighter lithium batteries, we freed ourselves from small battery energy density to 300-mile range EVs.

Zachary further adds that a BNEF study two years ago found that EV battery prices fell 35% in 2015. It stated that prices had fallen 65% since 2010, but it estimated battery pack prices at $350/kWh … which is considerably higher than the Tesla/Panasonic & GM/LG Chem estimates.

You can also read Steve Hanley’s recent article highlighting how the price of batteries is still falling quickly.

Another consequence of falling battery prices is the current market and future potential of other alternative energy drivetrains. For a while, CNG made a compelling conversion case for fleet owners. However, the dwindling price of batteries is tipping the scale in favor of pure battery vehicles. This leads us to question the use of hydrogen fuel cell vehicles for personal transportation. It could play a more efficient role in long heavy hauls and at offshore wind farms, but seems unlikely to go far in cars and SUVs.

Pity, EV Naysayers

We never tire of feeling sorry for naysayers. Their task riling against EV and PHEV fans is progressively getting harder. Of course, we will continue to nurse them back to reality and help them embrace the change that is inevitably happening.

In the meantime, the data backs our continued enthusiasm. Remember the price of lithium batteries when they became commercially available in the ’90s? Not too many of us could afford them. Today, they are a dime a dozen at your local corner shop.

About the Author

Nicolas Zart Nicolas was born and raised around classic cars of the 1920s, but it wasn't until he drove an AC Propulsion eBox and a Tesla Roadster that the light went on. Ever since he has produced green mobility content on various CleanTech outlets since 2007 and found his home on CleanTechnica.
His communication passion led to cover electric vehicles, autonomous vehicles, renewable energy, test drives, podcasts, shoot pictures, and film for various international outlets in print and online. Nicolas offers an in-depth look at the e-mobility world through interviews and the many contacts he has forged in those industries.
His favorite taglines are: "There are more solutions than obstacles." and "Yesterday's Future Now"

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